Capital Gains Tax (CGT) is imposed at the rate of 20% on:
- The gains from the disposal of immovable property situated in Cyprus.
- The gains from the disposal of shares in companies which own immovable property in Cyprus and that are not listed in any recognized Stock Exchange.
- The gains from the disposal of shares in companies which directly or indirectly participate in other companies which hold immovable property in Cyprus provided that at least 50% of the market value of the shares sold is derived from property situated in Cyprus (the disposal proceeds subject to CGT in this case are restricted to the market value of the immovable property held directly or indirectly by the company of which the shares are sold).
- Any trading nature profits derived from the sale of shares of companies which directly or indirectly own immovable property in Cyprus provided that such profit is exempt from taxation under income tax.
No CGT is imposed on the subsequent disposal of properties which are acquired in the period from 17 July 2015 up to 31 December 2016.
Determination of capital gain
The capital gain is calculated after deducting from the selling price the initial acquisition cost or the market value as at 1 January 1980 whichever is the higher, inflated by the retail price index in Cyprus. Expenses related to acquisition and disposal are deductible for tax purposes.
The following disposals of immovable property are not subject to CGT:
- Transfers arising on death.
- Gifts made from parent to child or between husband and wife or between up to third degree relatives.
- Gifts to a company where the company's shareholders are members of the donor's family and the shareholders continue to be members of the family for five years after the day of the transfer.
- Gifts by a family company to its shareholders, provided such property was originally acquired by the company by way of donation. The property must be kept by the donee for at least three years.
- Gifts to charities and the Government.
- Transfer as a result of reorganizations.
- Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.
- Exchange of properties, provided that the whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property, i.e. the payment of tax is deferred until the disposal of the new property.
- The gain Transfer under a qualifying loan restructuring
The following deductions exist for individuals:
|sale of own residence (under certain conditions)||85.430|
|sale of agricultural land by a farmer||25.629|
The above exemptions are granted only once for each taxpayer and not for each sale. An individual claiming a combination of the above is allowed a maximum of € 85.430.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.